Walden invests $6 mn in BankBazaar.com

BANGALORE: In its first investment in a pure play financial services start-up in India, Walden International, a global venture capital firm, has invested $ 6 million in BankBazaar.com, an online marketplace for consumer loans and insurance products.

This is the second round of funding for the Chennai-based start-up that raised $ 1.2 million of capital initially from a strategic investor, AVT Infotech.

"We will use this round of funding to aggressively hire and advertise our portfolio of services, including the lowest rates of insurance that we will soon introduce," says Adhil Shetty, chief executive officer, BankBazaar, who returned to India after a stint at Deloitte Touche Tomahatsu in New York to co-found the company in 2007.

Apart from direct-to-consumer services, the start-up also powers the MSN Money portal and offers lowest loan rates on other media sites. At present the company has a team of 40 employees most of whom are engineers.

Private equity investments in the banking and financial services sector has been on an upswing with nearly 44 deals worth $ 1,045 million in the sector during 2010, according to research firm Venture Intelligence.

For Walden, which is investing out of a global fund of $ 285 million fund, this is the third deal in India after the investments in the Raman Roy-led Quattro BPO and Co-Options Technologies in Hyderabad.

"This investment was driven by two factors- the quality of the team and the complete business model that spans from real-time offers on lowest rates to sealing the transaction for the consumer," says Rajesh Subramaniam, Managing Director of Walden India, who also manages the global fund's two prior investments in India-in software services firm Mindtree Technologies and Anantara Solutions.

BankBazaar which has tie-ups with leading commercial banks such as ICICI Bank, Axis Bank and HDFC Bank offers consumers a choice of the best rates on consumer loans, credit cards and insurance products based on mix of automation and large volume play.

"Online automated loan and insurance processing is 70% cheaper than selling through a physical bank branch this cost savings is shared with customer," says Shetty whose team took over a year to fine-tune the technology backbone that now powers the portal.

"We struggled in the first year to build the IP," says Shetty of the time when the fledgling start-up first hit the big time when they were picked as Finalists in the First Edition of The Economic Times Power of Ideas, an initiative to groom young entrepreneurs.

"By using technology to offer real time quotes to customers, BankBazaar was able to offer banks the ability cut their processing time from 30 days down to 2-3 days," says Subramaniam picking this as the differentiation for the company that has a founding team made up of members who had prior experience in global corporations such as Amazon, Microsoft and Kraft Foods.